I’m a regular shopper of both firms, frequenting Sam’s Club
and Wal-Mart, and ordering regularly from Amazon.I love Amazon’s smooth and helpful
website.And I’m increasingly unhappy
with the length of checkout lines in both Sam’s and WalMart(anybody from Bentonville reading this?) but
that doesn’t mean I understand the investor infatuation with Amazon.The theory apparently is that, at some date
in the future, Amazon will expand its margin.And then there will be earnings for investors.But then does their business still work?Shipping individual boxes to homes can never
be as efficient as shipping truckloads to stores and having consumers drive to
the store.So margin expansion comes
from pricing, not from be more efficient than WMT. And if they raise prices,
then doesn’t their advantage go away?

At the dawn of the
Internet age, in a meeting in 1999, Boston Consulting Group consultants and
Internet business CEOs told me that AMZN was clearly worth more than WMT.Further, WMT’s growth was over.Since then WMT has added $331 billion
in revenue.Oh, and WMT pays a dividend.

I didn’t get the valuation difference then, and I don’t get
it now.Although I would really like it
if Wal-Mart traded at the Amazon price-to-sales ratio….

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About Me

Grew up in Memphis, worked my way through the local university, married my high school sweetheart - still married 42 years later. Played in a rock band, couldn't make a living, became a CPA. Raised two great sons. Moved all over the U.S. with different finance and management jobs. Now working with multiple start-ups as an investor and advisor.